STEPHEN HAWKING WARNS ARTIFICIAL INTELLIGENCE ‘MAY REPLACE HUMANS’

The rise of Machines and AI is Fast Approaching

The rise of the machines was always going to come at a cost, as each
wave of technology destroys what has been put in place. The frenetic
pace of technological development in the areas of artificial
intelligence and robotics is causing massive shifts in the finance
industry.

The impact is already being felt on Wall Street, where there have
been far-reaching and significant changes, with technology eliminating
many jobs by replacing hundreds of humans with either robo-advisers or software.

Many investment banks and big institutions, in a bid to cut cost and
improve efficiency, use AI to automate financial tasks usually
undertaken by humans, such as wealth management, operations, risk
management, and algorithmic trading.

One of the areas that the Wall Street has seen the greatest
disruption of robotics and AI is the execution of buy and sell orders,
where robots carry out between 50% to 60% market trades, according to
CNN, citing data from Art Hogan. Hogan is the chief market strategist
for B. Riley FBR.

The preference for technology over human traders is premised on the
inability of the vast majority of traders to act consistently rationally
when trading. Often, people fail to control themselves, allowing
emotions to get in the way of their thoughts and actions.

Machines don’t suffer from these psychological issues when a major
trading decision is being made. This is because they remove emotion from
short-term trading activity, allowing for a more objective approach to
trading.

Laying a Claim to the Future of Investing

Artificial intelligence and robotics is fast advancing into the
investment sector, where its incredible ability to learn and think will
eventually make them the most advanced and complex investment systems
capable of helping corporations to make more efficient and effective
choices.

For instance, advisory bots are increasingly being used by companies
to assess investments, deals, and strategies in a fraction of a second,
much faster than any human quantitative analysts using traditional
statistical tools.

Such is the growing dominance of robots in the finance industry that
former Barclays boss, Anthony Jenkins warned they could displace half of
the workers in the banking sector, and lead to branch closures.

Activities such as calculations based on structured data and other
repetitive support tasks are the most susceptible to automation because
robots are well-suited for them.

There’s Still a Place for Humans in a Robotic Wall Street

While AI is probably the most robust technology there is today; its
ability to perform complex tasks is limited. Trading machines can only
learn historical data and trade patterns. However, stock market behavior
changes all the time and computers can be less adept in the face of
unexpected market performance.

Humans can easily adjust themselves to these changes. Getting the
robots to do the same, however, will require changing their algorithms,
which can be too expensive and time-consuming. For this reason, humans
will always be a step ahead and remain relevant.